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Since 2010, FDI in Malaysia has been going back and forth between USD 9 billion and USD
12 billion, placing the country as the highest recipients of FDI in the region. In 2017, FDI
flows dropped to USD 9.5 billion, for the first time since 2010, due to a backdrop in general
decline of investments in Southeast Asia (UNCTAD Worlds Investment Report 2018).
According to the Malaysian Investment Development Authority (MIDA), most of the
investments came from Switzerland, China, the Netherlands, Singapore, and Germany (56%
of foreign investments in 2017). Although China is the top FDI source for two years in a row,
the investment value has dropped by 18.7% to RM3.9 billion in 2017. China’s investment
has diversified into many industries such as transport equipment, non-metallic product,
electronics, and rubber products. Manufacturing industry has attracted RM 13.9 billion, while
FDI in the services sector reached RM28.8 billion and RM 4.3 billion in the primary sector.
The authorities want to make Malaysia into a gateway to the ASEAN market by offering
various incentives to foreign companies, notably the status of pioneer company and tax
reductions associated with investments. The country benefits from a high-skilled and
English-speaking workforce. As such, the country is ranked 23rd out of 190 economies by
the World Bank in its Doing Business 2018 report. However, the government maintains a
large discretionary power for authorising investment projects and uses it to obtain the
maximum benefits from foreign participation and by demanding agreements that are
advantageous in matters of transferring technologies or creating joint ventures.